Buyer closing in on Red Star

Aquiline Capital Partners, a private-equity firm led by the son of former AIG boss Hank Greenberg, is in the driving seat to buy Lloyd's of London insurer Equity Red Star.

The company is closing in on a deal after entering into exclusive talks with Equity's owner Insurance Australia Group (IAG).

Edi Truell, the founder of private-equity house Duke Street, had been granted preferred bidder status for the motor insurer but talks between IAG and his Tungsten vehicle collapsed over a disagreement linked to Equity's historic liabilities.

Equity, which has been valued at up to £100m, has been hit by mounting personal injury claims over the past few years. In January, it narrowly avoided a £1m fine by Lloyd's following an investigation into its underwriting standards.

It was ordered to pay £95,000 towards the costs of the investigation, having admitted two charges of "detrimental conduct". The charges related to losses incurred by the underwriting syndicate.

Aquiline could not be reached for comment. An IAG spokesman confirmed that the company "remains in discussions about the potential sale of its UK business".